Oil Producers Provided Production Allowances for Oil Moved by Rail
The Government of Alberta temporarily limited production to match export capacity to prevent Canadian crude from selling at large discounts. Due to delays in getting oil resources to tidewater the production limit is in effect through 2020. However, starting in December operators will be provided with special production allowances to increase oil production, if additional oil is moved by rail, in order to meet increasing demand. Many oil producers are capable of producing more than their curtailment limits permit and this allowance will enable operators to use all available rail capacity in Alberta.
Industry approached government with a proposal to ship more crude by rail in exchange for curtailment relief. This short-term approach will help address the continued lack of takeaway capacity caused by pipeline delays that are negatively impacting Alberta’s oil and gas sector.
Government will work with operators to set the special production allowance baseline, which will be based off the operator’s Q1 2019 average rail shipment.
Find more information about oil production limits.